A federal judge dealt a terrible blow this week to Tampa's effort to revitalize Channelside Bay Plaza. By rejecting the Tampa Port Authority's deal to buy the retail complex from an Irish bank, U.S. Bankruptcy Judge Christopher Sontchi stopped the clock on a vital civic project, kept the fate of the Channel District in limbo and raised the costs and risks to local taxpayers of stabilizing a public asset that is key to downtown's economy and appeal. Port officials should work through the judge's pinched legal perspective in the case and join the bank in bringing a stronger offer to the table.
The port's governing board agreed in September to buy out the Irish Bank Resolution Corp., which owns the mortgage on the buildings and which foreclosed on the property in 2010. The $5.75 million deal would have given the port, which owns the land under Channelside, total control of the property, ending an awkward two-headed ownership scheme and marking a fresh start for the retail and entertainment center that has struggled for years.
But the judge rejected the sale Tuesday and ordered liquidators to reconsider offers, saying a competing bid for $7 million by an investors' group, Liberty Channelside LLC, was denied on insufficient grounds. The port exercised its veto power over the sale in May after negotiations turned hostile, citing concerns with Liberty's commitment to rehabilitate the property. In his ruling, the judge said the deal the port subsequently arranged with the bank to buy the property was substantially lower in value, and he ordered liquidators to "kick the tires" and "market this thing aggressively" to generate a deal the court could approve.
The judge's ruling ignores the public costs the port has absorbed in its years-old battle to find new and responsible long-term partners to run the retail center. In the past several years, two purchase agreements have collapsed, the center has lost more tenants and customers, and the complex has lost valuable time in this recovering economy by failing to remain competitive. The ruling ignores the intangible benefit of bringing Channelside under sole ownership and local control. It also ignores the value of ending this uncertain business climate by bringing in a new vision for Channelside and the millions of dollars a permanent operator could bring to reshape the venue. The judge has a responsibility to maximize this asset for creditors, but his decision completely missed the public interests at stake and the value to the bank in settling after all this time.
Port and bank officials should set aside any bruised egos and work to salvage the deal. The bank still has a financial stake in moving quickly to rid itself of Channelside, and the port — as a major landowner and player in the Channel District — still has an interest in ensuring the complex shapes downtown for the better. The motivations that brought the two parties toward a deal last September haven't changed. It may merely require renewing that commitment and laying out more money and clearer terms so the judge can better see the value to both sides of ending the stalemate and maximizing a community asset.